Market Development Strategy, A Tool For Achieving Business Growth In A Small Scale Enterprise (A Study Of Pepsi Sales In Akanu Ibiam Federal Polytechnic Unwana)
The focus of this study was to assess market development strategy a tool for achieving business growth in a small scale enterprise using a case study of Pepsi sales in AkanuIbiam Federal Polytechnic Unwana, Ebonyi State. 100small scale enterprises were selected as the sample size. The survey method constitutes the research design. Questionnaire design in the five-point Likert scale constitute the research instrument. The mean scores was used to analyze data. The analysis indicates that the market development strategy adopted by small scale enterprises are basically customer service strategy, advertising, quality improvement as well as unique packaging and effective distribution channels. Market development strategy of small scale enterprises affect it productivity through the enhancement of customer value which facilitate increase in sales but in spite of this, market development strategy of small scale enterprises is constrained with problems arising from the inability of small scale enterprises to combine numerous models and tools of marketing used in order to stand dynamism inherent in strategic implementation due to changing marketing environment as well as lack of integrated views of planning and development of marketing strategy. As such it was recommended that there should be continuous education and training of staff in field such as customer satisfaction and customer retention.
Table of Content
- 1.1 Background to the Study
- 1.2 Statement of the Problem
- 1.3 Objectives of the Study
- 1.4 Research Question
- 1.5 Research Hypothesis
- 1.6 Significance of the Study
- 1.7 Scope of Study
- 1.8 Limitation of the Study
- 1.9 Definition of Terms
- 1.10 Organisation of the Study
2.0 Literature Review
- 2.1 Conceptual Framework
- 2.2 Overview of Marketing Concepts
- 2.2.1 Product
- 2.2.2 Product Life Cycle
- 2.2.3 Product Levels
- 2.2.4 Price
- 2.3 Market Development Strategy
- 2.4 Strategic Marketing Models
- 2.5 Marketing Strategy Models
- 2.6 Channels of Distribution
- 2.6.1 Manufacturer Directly to Consumer
- 2.6.2 Manufacturer To Retailer to Consumer
- 2.6.3 Services of Wholesalers
- 2.6.4 Services to Retailers
- 2.6.5 Promotion
- 2.7 Marketing Mix and Strategy Development
- 2.8 Theoretical Framework
- 2.8.1 Theory of Adoption and Diffusion of Innovation
- 2.8.2 Theory of Management by Objectives (MBO)
- 2.8.3 Theory of Advertising
3.0 Research Methodology
- 3.1 Research Design
- 3.2 Population
- 3.3 Sample and Sampling Technique
- 3.4 Instrument for Data Collection
- 3.5 Validity of the Instrument
- 3.6 Reliability of the Instrument
- 3.7 Method of Data Collection
- 3.8 Data Analysis
4.0 Results and Discussion
- 4.1 Result
- 4.2 Discussion
5.0 Summary, Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendation
1.1 Background to the Study
Marketing has become the basic element of development in the Nigerian economy because it involves production and consumption of goods, services and ideas. Through the activities of production and consumption, individuals obtain what they need and want for satisfaction. The main objective of marketing is to produce goods and services efficiently to meet the needs and desires of customers, and to do so at a profit. The level of consumption of goods and services sometimes depends on how the goods and services are marketed.
Marketing has been defined by American Marketing Association (1985) as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. Marketing concept holds that the key to achieving organizational goal is being more effective than competitors in creating, delivering, and communicating. According to Obi (2002), marketing is the performance of business activities that direct products and services from producer to consumer or user to satisfy customers’ demand and accomplish the company’s objectives. Obi further explained that marketing consists of a large number of business activities which include gathering product information, designing and developing, packaging, transportation, advertising and selling.
In the same vein, Kotler (2003), viewed marketing as getting the right goods and services to the right people, at the right place, at the right time, at the right price, with the right communication and promotion. Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large (American Marketing Association, 2007). Kotler and Keller (2009) defined marketing as an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customers relationships in ways that benefit the organization and its stakeholders. Marketing as defined by the authors aforementioned involves production and consumption of goods and services to satisfy wants and needs. Therefore the concept of marketing adopted for this study is as defined by Kotler (2003). Kotler defined marketing as getting the right goods and services to the right people at the right place at the right price with the right communication and promotion. Marketing therefore, involves the activities that link the products or services of a business to its customers. These activities include production of quality goods/services, distribution of the goods/services to the expected customers, disseminating information about the goods/services through appropriate media and setting the goods at affordable prices to the target market (a target market is the customers a company wants to sell its products and services to). Marketing is divided into four general set of activities, universally known as the four Ps, which are product, promotion, price, and place MaCarthy (1998). Apart from the desire to contribute materially to the development of the economy, owners of enterprises also desire to maximize profit and this cannot be done effectively without a good marketing mix. Marketing mix used by a particular firm will vary according to its resources, market conditions and changing needs of clients. According to Obi (2002), marketing mix is a design that enables the firm to determine how it will shape its total package of product, price, promotion, place and communication to the target market. Obi further explained that the consumer is the focus of each of these elements (product, place, price, and promotion) in marketing.
A product, according to Dhiman (2006), is anything that can be offered to a market to satisfy a need or want of a customer. The products, which can be marketed include goods, services, persons, places, organizations, and ideas amongst others. Promotion involves the communication that marketers engage in with customers in order for the customers to acknowledge the product. These communication activities such as personal selling, advertising, and sales promotion among others, may vary depending on the type of product and on its respective marketing objectives and goals. Place as a component of the marketing mix represents the distribution channels that an organization utilizes to convey its products or services to the end users. It refers to When” (the time of distribution), Where” (the location the goods are needed) and How”( the means of conveying the goods to the end users), goods and services are made available for the users. Price is the amount of money a customer pays in exchange for a product. These elements (product, price, place, and promotion), serve as strategies used by enterprises in running the businesses and are used also to develop both long-term and short-term strategic programmes, for instance, a trade show (Palmer, 2004)
The heart of marketing strategy is the development of a response to the marketing place. To respond to customers, an organization develops a product, determines the price customers are willing to pay, identifies the place most convenient for customers to purchase the product or access the service, and promotes the product to let the customers know it is available (Jones and Bartleft, 2011). Strategy is a plan or method chosen to bring about desired future, such as achievement of a goal or solution to a problem unknown to other competitors (Jones and Bartleft, 2011). In marketing, strategy is all about integrating organizational activities and utilizing and allocating the scarce resources within the organizational environment so as to achieve the expected objectives.
The marketing strategy of a business usually starts with analyzing the opportunities for growth and profits. The firm is likely to move in a direction in which it has an advantage over competitors. Thus, marketing strategy is a plan for accomplishing the growth objectives of a firm (Obi, 2002). A business strategy typically and clearly articulates the direction a business will pursue and the steps it will take to achieve its goals. In a standard business plan, the business strategy results from goals established to support the stated mission of the business (Wisegeek. 2011). Business strategy can be utilized in micro enterprise, small and medium enterprise, and large enterprise. In this study, utilisation is the application of the marketing mix elements to support the marketing activities of small and medium enterprises for business growth.
Small and medium enterprises (SMEs) are very heterogeneous group of businesses usually operating in the service, trade, agri-business, and manufacturing sectors. SMEs include a wide variety of firms such as village handicraft makers, small shops, and computer software firms that posses a wide range of sophistication and skills. Some are dynamic, innovative, and growth-oriented while others are satisfied to remain small and perhaps family owned. SMEs usually operate in different sectors such as, one-man business, family business, or a partnership business, of the economy and employ mainly wage-earning workers. SMEs are often classified by the number of employees and/or by the value of the assets. The method of classification varies within regions and across countries relative to the size of the economy and its endowments (Inegbenebor, 2006).
Many writers have given various definitions and explanations as to what small and medium enterprises are. Many have defined SMEs based on the characteristics of the business such as size, level of operations, type of industry, assets employed, and number of employees, turnover, market, and management of control of the business or several others. SMEs differ from industry to industry and country to country, what could be regarded as small and medium enterprise in a developed country may be regarded as a large scale enterprise in a developing country (Ihua, 2009).
In Nigeria, a Small and medium enterprise is defined as any enterprise with a maximum asset base of N1.5 billion (excluding land and working capital), and with a workforce of between eleven and two hundred staff (Small and Medium Enterprises Equity Investment Scheme, 2007). The Central Bank of Nigeria (CBN) defined SME as an enterprise that has an asset base(excluding land) of between five million naira and five hundred million naira, and labor force of between eleven and three hundred in its employment (Ajose, 2010).
In countries such as USA, Britain and Canada small and medium scale businesses are defined in terms of annual turnover and the number of paid employees. In Britain, for example, small scale business is conceived as that industry with annual turnover of two million pound (£2,000,000) or less with fewer than two hundred paid employees. In the case of country like Japan, a small and medium scale enterprises are defined as those manufacturing with hundred million yen paid up capital and three hundred employees (Ayaggari, Beck and Demirguc, 2003). In a more general and comprehensive term, Ogechukwu (2005) chronicled a general criteria for defining SMEs in different countries. These include number of employees, annual turnover, local operations, sales volumes, financial strength, manager and owners autonomy, relatively small markets compared to the industries and capital usually supplied by individual or shareholders.
European Union in 2003 adopted a universally accepted definition of SMEs and micro business as companies with less than two hundred and fifty employees, with respect to financial criteria, revenues not exceeding fifty million Euro (measure as turn over) or forty three million euro (measure as balance sheet). In addition, the European commission (2007) specified term of ownership stating that small and medium enterprises must be independent with less than twenty five per cent of the business being owned by outside interest. As for this study small and medium enterprise is defined as an enterprise with investments in machinery and equipment between five hundred thousand (#500,000.00) and three hundred million naira (#300,000,000.00), excluding cost of land and with a workforce of between ten and hundred full time workers.
An enterprise is any organization engaged in economic activity irrespective of its legal form. It includes self-employed persons and family businesses engaged in craft or other activities, and partnership or associations regularly engaged in an economic activity (Europa in Osuala, 2004). Many enterprises and manufacturing companies in Nigeria disseminate and provide information concerning the business through adequate education and training of the small and medium enterprises managers to enable these managers cope with the current pace, trend and challenges in business and marketing practices. The knowledge acquired as a result of the training, enables the managers create awareness, of the usefulness of the products and services made by the companies, among consumers and those engaged in retail businesses (Obasi and Ebirim, 2008).
A manager as defined by Obi (2002), is the person in authority to plan, control and organize a business in an effort to make it successful. A business is a commercial activity engaged in as a means of livelihood or an entity which engages in such activities. A business is also seen as an organization or enterprising entity engaging in commercial, industrial or professional activities, from a small owner-operated company, such as a family restaurant, to a multinational conglomerate (business dictionary.com, 2012). Business activities such as creating awareness about the products and distributing the products to needed places are sometimes carried out by a sales representative employed by the company. A sales representative is a person whose duties include the identification of the goods and services desired by a set of consumers, as well as the marketing of those goods and services on behalf of a company. Sales representatives are also regarded as employees in a company excluding an independent contractor, who work for producers or for the state and who receive, or is entitled to receive, any remuneration (Wisegeek.com, 2011). A producer is a person who produces goods for consumers or specific target market at the most basic level. A producer assumes responsibility for producing or manufacturing the product but may or may not be involved in the product’s marketing and sales. Product’s marketing may be carried out by a sales representatives, who sometimes display around the state what the producer have for the general public (businessdictionary.com, 2012). It is against this background that the researcher carried out this study.
1.2 Statement of the Problem
The objectives of Small and medium enterprises (SMEs) are usually achieved through the utilisation of the full potential of marketing mix elements (product, price, place, and promotion) in running the businesses. Marketing mix as practised by small and medium enterprises operating in Enugu state thus portray problems when not utilized, thereby limiting the growth of the business. Inadequate marketing mix activities have become the problem of small and medium enterprises operating in Enugu state. There seem to be a problem in the product features in terms of packaging. The product at times is exposed in a way it could easily damage before it gets to the final consumer. There seem to be a problem in the distribution method utilized by small and medium enterprises operating in Enugu state. Some of the products do not get to the needed places at the right time. Doyle (2000) stated that to satisfy customers, goods have to be available in good condition at the right time in a convenient and accessible location.
Absence of uniformity in pricing system and poor promotion activities have been observed as problem affecting the sale of the product. At times managers employ the services of wrong media organization in promoting the products. For instance, a manager might decide to use advertising on a product that actually needs personal selling or sales promotion, this would not help consumers to get information about the product that will be beneficial to them (consumers). At times in order to maximize profit, the problem of profiteering (profiteering involves making large profit by charging high prices for a product) is noticed. As a result of these problems, consumers find it difficult to appreciate or hold to high esteem, the products produced by small and medium enterprises, thereby resulting to poor patronage. This study, therefore becomes imperative as to assess market development strategy a tool for achieving business growth in a small scale enterprise using a case study of Pepsi sales in AkanuIbiam Federal Polytechnic Unwana, Ebonyi State.
1.3 Objectives of the Study
The aim of this study is to assess market development strategy a tool for achieving business growth in a small scale enterprise using a case study of Pepsi sales in Akanu Ibiam Federal Polytechnic Unwana, Ebonyi State. Specifically, the objectives of the study include to;
- Find out the market development strategy adopted by small scale enterprises for Pepsi sales in Akanu Ibiam Federal Polytechnic, Unwana.
- Ascertain how market development strategy affect productivity of small scale enterprises in Akanu Ibiam Federal Polytechnic, Unwana
- Identify the factors militating against the effectiveness of the market development strategy of small scale enterprises in Akanu Ibiam Federal Polytechnic, Unwana
1.4 Research Question
The following research questions are formulated to guide this research:
- What is the market development strategy adopted by small scale enterprises for Pepsi sales in AkanuIbiam Federal Polytechnic, Unwana?
- How does market development strategy affect productivity of small scale enterprises in Akanu Ibiam Federal Polytechnic, Unwana?
- What are the factors militating against the effectiveness of the market development strategy of small scale enterprises in Akanu Ibiam Federal Polytechnic, Unwana?
1.5 Research Hypothesis
- HO1 There is no significant influence of market development strategy on the sales of Pepsi by small scale enterprises in Akanu Ibiam Federal Polytechnic, Unwana
- HA1 There is a significant influence of market development strategy on the sales of Pepsi by small scale enterprises in Akanu Ibiam Federal Polytechnic, Unwana
1.6 Significance of the Study
The findings of this study, if implemented, would be beneficial to the following: managers of small and medium enterprises, consumers, business education students in tertiary institutions, and planners of business education curriculum.
The findings of this study would educate the managers of small and medium enterprises operating in Enugu state to be conscious of the product features as the product plays important role to the growth of the business. When it is known to the managers how important the features are, they would improve the features of the products, such as; packaging and branding the product in a way that will increase the efficiency of the operation of the SMEs, and avoid low quality product. In this way, more sales will be recorded and the objectives of the managers are accomplished.
The consumers would benefit from improved marketing mix (product, distribution, promotion, price) that SMEs managers will adopt, such as getting good quality product that will actually serve it purpose, getting the product easily and in a suitable environment. For instance, manufacturer to consumer, manufacturer to wholesaler to consumer, manufacturer to wholesaler to retailer to consumer, door to door distribution. Getting relevant information on available product through accessible medium and paying at affordable prices both for new and existing products. Business education students in tertiary institutions would find the results of this study beneficial for further and future research, through the school and faculty library. And the study will educate the students in the sense that when the students graduate, some might be involved in production, and with the knowledge they have acquired from this study, as producers, after graduation, they will be conscious of what they produce for the general public to consume and also utilise the four Ps of the marketing mix in promoting the business. The results will also add to the available literature in the area of marketing mix as practiced by SMEs.
The result would motivate curriculum planners to emphasize on marketing mix in the content of curriculum in teaching business and entrepreneurship education. The curriculum planners would use the knowledge of the findings in curriculum review, and update.
1.7 Scope of Study
The study covers market development strategy a tool for achieving business growth in a small scale enterprise using a case study of Pepsi sales in Akanu Ibiam Federal Polytechnic Unwana, Ebonyi State.
1.8 Limitation of the Study
In the course of this study, the researcher encountered some limitations. There was unwillingness of respondents to fill the questionnaires. Some of the copies questionnaires were also reported missing and it was severally replaced and this affected the researcher negatively finance wise. Also, the researcher faced time constraints and had to combine the research with other academic activities and coursework. Lastly, the researcher made use of Akanu Ibiam Federal Polytechnic Unwana since all the tertiary institutions in Ebonyi state could not be exhausted.
1.9 Definition of Terms
Market Development Strategy:
Market Development Strategy is a growth strategy put in place by companies or organizations to introduce their product or solution to target audiences they have not yet reached or are not yet currently serving. Market development is a growth strategy that identifies and develops new market segments for current products. A market development strategy targets non-buying customers in currently targeted segments. It also targets new customers in new segments.
The rate at which a firm produces and markets its products
Business Growth is a stage where the business reaches the point for expansion and seeks additional options to generate more profit. Business growth is a function of the business lifecycle, industry growth trends, and the owners desire for equity value creation.
Small Scale Enterprises:
A small scale enterprise is a privately owned and operated business, characterized by a small number of employees and low turnover. A small enterprise usually only shares a tiny segment of the market it operates in.
Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and developed in 1893 by Caleb Bradham and introduced as Brad’s Drink, it was renamed as Pepsi-Cola in 1898, and then shortened to Pepsi in 1961.
1.10 Organisation of the Study
This study is organized into five chapters.
- Chapter one included the background of the study, research problem, research objectives and questions as well as limitation of the study.
- Chapter two contains the literature review.
- Chapter three includes the methodology and study area.
- Chapter Four contains the results and discussion of key findings of the study.
- Chapter Five finally looks at the summary, conclusions, and recommendations based on the findings.
5.0 Summary, Conclusion and Recommendation
The study examines market development strategy a tool for achieving business growth in a small scale enterprise using a case study of Pepsi sales in Akanu Ibiam Federal Polytechnic Unwana, Ebonyi State. The population of the study consists of the small scale enterprises. Out of which the 100 respondents were selected as the sample size. The survey method constitutes the research design. Questionnaire design by the researcher in five-point Likert scale constitutes the research instrument. The mean scores were used to analyze data. The analysis indicates that the marketing strategy adopted by Small scale enterprises are basically customer service strategy, advertising, quality improvement as well as unique packaging and effective distribution channels. Marketing strategy of Small scale enterprises affect it productivity through the enhancement of customer value which facilitate increase in sales but in spite of this, marketing strategy of Small scale enterprises is constraint with problems arising from the inability of Small scale enterprises to combine numerous models and tools of marketing used in order to stand dynamism inherent in strategic implementation due to changing marketing environment as well as lack of integrated views of planning and development of marketing strategy.
Product as an element of marketing mix contributes greatly to the growth and development of small and medium enterprises in both developed and developing countries. The constraints on the growth and development of small and medium enterprises (SMEs) operating increased as a result of poor product features. Producers and managers must agree on better ways of making the product more attractive and marketable. The problem of poor patronage of SMEs product is contributed to by unrestricted number of middlemen and absence of producers retail outlets. These constitute great impediments to delivery SMEs product to the right place at the right price. Promotion creates desirable awareness as to products availability and places to get the product. Adoption of good promotion activities would trigger consumers about the product and tremendously boost sales. Price stability encourages producers to maximize their production and consequently regularise supply to the market. Producers should avoid using high price to introduce new product into the market as this would discourage consumers.In view of the findings it is clear that the market development strategy of small scale enterprisesis effective but constraint with complexity of policy formulation and implementation due to poor human capital that can effectively manage the marketing of small scale enterprises.
Based on the findings of this study, the following are recommended;
- Complete “paradigm shift” in managerial thinking, in terms of service quality delivery through continuous education and training of staff in field such as customer satisfaction and customer.
- Pricing policy of small scale enterprises’ product should be reviewed to make their product affordable and give them competitive advantages.
- The product offering need to be more consistent and reliable, ensuring that an overall perception s created within the mind of their customer. This will facilitate customer retention.
- Small scale enterprises’ management needs to spend more time building relationship with their customer. This will assist in receiving regular feedback from consumers in terms of customer satisfaction.
- The market unit of small scale enterprises should be more sensitive of consumer needs. This will facilitate customer satisfaction as well as loyalty. This can be achieved through the use of customer feedback from salesmen and canvassers or marketing research.
Market Development Strategy, A Tool For Achieving Business Growth In A Small Scale Enterprise (A Study Of Pepsi Sales In Akanu Ibiam Federal Polytechnic Unwana)
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